UK economic outlook Nick Stamenkovic, Group Economist Information classification: Public
UK economy stuck in a low gear 1.2 1.0 2.3% 1.8% 0.8 1.8% 1.4% 0.6 0.4 0.2 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 2017 2018 Source: ONS Information classification: Internal 2
UK economic growth set for moderate acceleration, especially compared to some peers GDP growth among the G7 economies Annual change (%) by quarter 4.0 Forecast 3.0 UK 2.0 G7 Range 1.0 0.0 2015 2016 2017 2018 -1.0 Information classification: Internal 3 Source: ONS
Diverging trends Household spending and Business investment (qoq) 1.5 1.0 0.5 0.0 -0.5 Business Investment -1.0 Household Spending -1.5 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 4 Information classification: Public Source: ONS, Bank of England
Real incomes are on the rise 6 5 4 3 Higher real 2 wages 1 0 -1 -2 -3 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Average earnings (3mth yoy) CPI (yoy) Information classification: Internal 5 Source: ONS
Strong jobs growth 900 9.0 800 8.0 Annual change in empoyment, 000s 700 7.0 Unemployment rate, % 600 6.0 500 5.0 400 4.0 300 3.0 200 2.0 100 1.0 0 0.0 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 2018Q1 Employment growth Unemployment rate Information classification: Public 6 Source: ONS
South East keeping its head above water PMI, February 2019 56 54 52.3 51.5 52 50 48 46 44 Wales Emids NW East SE SW Wmids Yorks UK London Scot NE Information classification: Public 7 Source: NatWest PMI report
Lacklustre housing market 16% 14% 12% North West 10% House price growth 8% Yorks 6% UK ex L&SE 4% 2% East 0% -2% South East -4% J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N London 2016 2017 2018 Information classification: Public 8 Source: LSL, RBS economics
Sterling remains in the doldrums 110 105 100 95 90 85 80 75 70 1990 1991 1992 1994 1995 1997 1998 1999 2001 2002 2004 2005 2007 2008 2009 2011 2012 2014 2015 2016 2018 Trade weighted index (£) Information classification: Public 9 Source: Bank of England
Delay and confusion is costly Brexit generates uncertainty for businesses Investment has lagged broader economy [Industries’ employment shares are shown in square brackets] Information classification: Public 10 Source: Bank of England; Bloom et al (Fiscal Studies, Dec 2018)
EU migration has fallen Information classification: Public 11 Source: ONS
Long run economy impacts UK Government analysis of Brexit scenarios Information classification: Public 12 Source: UK Treasury
Interest rates lower for longer 6 5 Bank Rate (%) 4 3 2 1 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 Actual Past forecasts Feb 2019 forecast Information classification: Public 13 Source: Bank of England
Poor productivity growth bedevils the UK economy 125 2014 2015 2010 2012 2016 2017 120 115 2018 Index (UK 2009 = 100) 110 105 100 95 90 85 80 2000 2005 2010 2015 2020 2025 14 Information classification: Public Source: ONS, OBR
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